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Wednesday, July 15, 2009

Elliott Wave Update ~ 15 July

"Bulls got to take it as high above the neckline as they can" - ok so I quoted myself.

But still - that was some serious upside surprise, the hallmark of P2 it seems. Another 90% up day (this one easily surpasses) and the second biggest advance/decline volume ratio of P2. Ended the day at a 28 - 1 score. So P2 would seem to be in its next major advance up to a new peak.

In review, the market seemed to have traced a double zigzag from 666 to 956 peak. The subwaves fit best into that structure and zizgags are what we expect for a wave 2 sharp rally. However P2 failed to achieve a high enough price and also likely needed more time. So a pullback occurred and now it certainly seems P2 is on its way again. You only get to have 3 zizgags in a corrective rally, no matter how big.

EW theory works on sentiment. Its hard to gauge just how low (or high) sentiment readings must go. However I have been watching the $BPSPX chart as that is the only daily updated thing I can really go on. I showed it just last night. And watching the RSI readings are useful in certain situations it seems. Something like RSI readings wouldn't have helped much on the way down in P1. But they are useful on rallies of a primary size or bigger. The 2003-2007 rally also gave reliable RSI pullbacks. So every indicator has its usefulness I think at certain times.

Regardless I really am having a tough time figuring out the squiggles in trying to see where it may go short term. No matter though. What this does remind me is a small bit of the initial rally off the 666 low in its initial bullishness. So will there be a big fat wave [ii] back to the neckline or even below 912? That's hard to say after a 28-1 up day. Sometimes these "kickoffs" have their own targets before taking a deeper breather. It almost "feels" as if the market is tired and bored of oscillating between 878 - 930 (with the pops to 950) and wants to go somewhere else. That would mean above 956. It sure was in a hurry today.

The $BPSPX sentiment chart has now just begun to correct upwards. I expect a new high reading on this chart. So it'll be watched from here on out of course. Elliott Waves is about sentiment and the swings between pessimism and optimism.

Just remember the basics of the theory: P2 will end when most of the daily readers think I'm crazy calling for new lows or some kind of P3 wave. I myself may doubt things. So far none of us have much doubt probably. Some are even plotting the 2 right shoulders on the H&S and going to try to short it back to the neckline. Hey it might work, I rule out nothing and it would be a "normal" wave 2 retrace. But you got to be nimble because Mr. Market may not agree with it.


  1. I see the posibility of an expanding diagonal with next target being 969 before heading back down to 807.

  2. Dan,
    It appears to be about the calendar now. Getting to 980/1050 points wise is well w/in reach. Timing is another issue, at this point you are suggesting a mid to late august timeframe which suggests a large pullback is improbable. Has EWI updated their targets, kenny had said that EWI had an 800 target prior to final P2 peak!
    Thanks again.

  3. i know you rule nothing out dan, but i'd recommended you and your folks not get to enamored with the bullish side. i have equal amount of extremely alarming indicators for the bear (rsi, nyse adv and breadth patterns, trin, etc) as the bull (mcclellan, breadth, etc). it is quite polar. one set of indicators tells me we drop 150 pts starting next week and another says p2 resumes. i give greater weight to neither right now and the waves do me no help. if you recall i called the 960 mini top and now i think it's too early for either side IT

  4. JB, that is why I have been relying on sentiment and wave structure more than straight up T/A.

    And sentiment has lots of room to run back to a new peak. The theory calls for it.

    Also you cannot ignore a 10-1 up day and then a 28-1 up day almost back to back.

    Mark, EWI has my count of a double zigzag from 956 - 869.

    EWT, those are rare and I am not sure they make sense on a P2.

  5. I meant expanding triangle. It usually occurs at the prior level to the final trust of an actionary wave. So it could make sense because of the time it would take to complete and how it fits into the Fib time retracement. I guess we'll see how 969 (1.62 of Y - the Y wave was 1.60 of X) holds.

  6. Thanks , shall the ghost complex H&S’s pattern continues to be an aversion to some or shall it morph into a toothsome double top pattern the end state would be the same. Both will end the P2, as a matter of fact I am starting to admire the latter at this giving point in time; for it adds a few more logs to the fire -sale that is about to ensue courtesy of old fashioned greed. I am not sure if it was Oracle or counter part from the dynamic duo that used to track the cycles count; needless to say, do you see a major one coming up on the 22nd? I ponder!

  7. P2 will end when most of the daily readers think I'm crazy calling for new lows or some kind of P3 wave.<<

    I don't even think it is a P2. but it will end when everyone thinks it is going higher and probaly those who expect a 5 3 5 here will be especially fooled. this rally will end sooner than most think. you are in wave B of a bear market ZZ or wave (4) of P1. It's a damn flat. when this five is done, this rally is done.

  8. kenny,

    is this the flat you are talking about?

  9. i think minute wave 3 just completed at 934.31. apparently there was a little left to go. i believe we should now be seeing minute wave 4 correcting

  10. If you read his site he expects us to reach near or new highs w/in a week and then that's all she wrote. then we're down.

  11. Hi Grand,

    What is your target for minute wave 4? 910 or 922?


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